Feeding the slot machine all day

[chessman]

I appreciate all of you taking the time to share your thoughts, many good ideas. I believe for vast majority of us swing traders, boredom during the day maybe the number one cause for impulsive non system trading.

There was a time when I tried to do what Linda Raschke(sp) advises, trade around a core position. There maybe some merit to it, but on balance it has cost me money. Once you get into that mind set, its very easy to overdo it.

This may sound a little comical, but I even looked into a medical solution to the monkey mind during the day. Once I mentioned to my cousin who is a physician, that I have this need for impulsive trading during the day, I just wish I could sit and do nothing. She made an off hand comment about ADD ( attention deficit disorder).

So I promptly bought couple of books on ADD. I probably don't have ADD and a vast majority of traders also don't , however I am convinced that the medication to subside ADD has some merit and application for us traders. It does a great job to soak up some of that nervous energy and the need for activity. Only if I could get someone to write me a prescription...

 

[Zuizo]

Big Money... is in the sitting (Swing and Position trading). I have heard that many times. I however think that that theory is only partially true.

A business year can be broken down into time fractals (Quarters, months, weeks, days, hours... )

By only specializing in 1 product line, you are not maximizing true profit potential, by widening the product line into 3 time products *ALL WORKING SIMULTANEOUSLY* I do believe that the trading business will achieve greater % returns over the same business year.

I consider my trading business as a store. It has 3 types of inventory... on any given day all three products may be bought or sold. However, the store keeper must manage the inventory accordingly:

1. Perishables, my produce section (Daytrading):
This inventory has a very short shelf life, I know that if I don't turn this inventory over quickly it will spoil on me and I will end up taking a loss on the product. However, if managed properly, this is a solid cash crop, I will sell this inventory quickly... AND REALIZE PROFIT EACH DAY THE STORE IS OPEN FOR BUSINESS. I like to buy bulk supply put .40 - 1.00 on top and then send it back out the door. I know that this commodity is NOT rare, therefore, I keep profit % margins small and try to do bulk volume/size.

2. Trendy toys, (Swing trades):
This inventory is recognized as what is HOT in the current environment, by recognizing the tastes of the market crowd, I try to acquire inventory that I can sell at a 15 -25% mark up based on supply and demand. Like buying beenie babies, pokemoncards , in early October and then letting all the inventory go in Mid December just before Christmas. Again, holding onto inventory too long will not maximize the profit potential in each time fractal.

3. Rare collectables (Position trade Leaders):
This inventory is harder to come by, I recognize that it is not as easy to acquire these goods at reasonable prices, the opportunity to find such valuable items only come in small "windows of opportunity". Once an opportunity presents itself, I like to acquire as much as is safely achievable, in some instances I will liquidate some trendy toys inventory to increase my buying power when these rare opportunities arise. HOWEVER, like any dealer of Rare collectables, if I see that I can fetch 30% - 50% return on inventory, I may sell a portion of these fine collectables. Sell a little more at 65- 75% gain and sit on the rest as long as I can stand it (but I probably turn them over quicker than I should )

So there you have it... 3 products, 3 time frames, maximizing the time fractals that make up the business year.

Cheers!

-- Z

 

[jack hershey]

Quote from Zuizo:

Big Money... is in the sitting (Swing and Position trading). I have heard that many times. I however think that that theory is only partially true.

A business year can be broken down into time fractals (Quarters, months, weeks, days, hours... )

By only specializing in 1 product line, you are not maximizing true profit potential, by widening the product line into 3 time products *ALL WORKING SIMULTANEOUSLY* I do believe that the trading business will achieve greater % returns over the same business year.

I consider my trading business as a store. It has 3 types of inventory... on any given day all three products may be bought or sold. However, the store keeper must manage the inventory accordingly:

1. Perishables, my produce section (Daytrading):
This inventory has a very short shelf life, I know that if I don't turn this inventory over quickly it will spoil on me and I will end up taking a loss on the product. However, if managed properly, this is a solid cash crop, I will sell this inventory quickly... AND REALIZE PROFIT EACH DAY THE STORE IS OPEN FOR BUSINESS. I like to buy bulk supply put .40 - 1.00 on top and then send it back out the door. I know that this commodity is NOT rare, therefore, I keep profit % margins small and try to do bulk volume/size.

2. Trendy toys, (Swing trades):
This inventory is recognized as what is HOT in the current environment, by recognizing the tastes of the market crowd, I try to acquire inventory that I can sell at a 15 -25% mark up based on supply and demand. Like buying beenie babies, pokemoncards , in early October and then letting all the inventory go in Mid December just before Christmas. Again, holding onto inventory too long will not maximize the profit potential in each time fractal.

3. Rare collectables (Position trade Leaders):
This inventory is harder to come by, I recognize that it is not as easy to acquire these goods at reasonable prices, the opportunity to find such valuable items only come in small "windows of opportunity". Once an opportunity presents itself, I like to acquire as much as is safely achievable, in some instances I will liquidate some trendy toys inventory to increase my buying power when these rare opportunities arise. HOWEVER, like any dealer of Rare collectables, if I see that I can fetch 30% - 50% return on inventory, I may sell a portion of these fine collectables. Sell a little more at 65- 75% gain and sit on the rest as long as I can stand it (but I probably turn them over quicker than I should )

So there you have it... 3 products, 3 time frames, maximizing the time fractals that make up the business year.

Cheers!

-- Z

A very neat post. I learned a lot from it.

 

[Momento]

I do the exact same thing as the analogy mentioned above. (I've never thought it in that way tho, very interesting )

Daytrade / Swing / Investing @ the same time.
1-Daytrade ES.
2-Swing stocks.
3-Manage a portfolio.

Once the momentum and volume decreases on the ES, i will sit back and do some charting on the day's movers. Read some updated news, (occassionally watch CNBC to see what they are bullshitting about), and then i will make decisions and plans for my EOD swings. Most of the time by 1-2pm I can tell if the swings are still going my direction. If so, i would add on to position etc, @ the EOD.

If there is absolutely nothing to do, I would practice on my golf swing and short game. It allows you to calm down, and enjoy the outdoors.

 

[Magickian]

Zuizo's exactly right: the nature of the Market is a fractal one. If you can play it at all scales, you're understanding of market behavior will improve considerably.
However, I think you have to be very well capitalized to pursure this strategy.

 

[-ooO-(GoldTrade]

chessman > Ed Seykota in the mkt wizards interview <

I guess the point of it was, why waste your time during the day trading?

chessman > what to do with the rest of 6-7 hours in a trading day? <

Again, why waste your time? You are spending your time trapped because you want to. It has always been your choice. You are doing now what you dreamed about in the past. Your present is the result of your own past thoughts.

Chessman > Most of us are taught that you succeed in life by working hard, <

I don’t know where you went to school. I guess they teach that in the West Virginia Coal minds. We were taught to work smart. Not to work hard.

Dennis Hopper did a movie after Easy Rider, called “Kid Blue!” The Kid comes to a company town. He starts in the basement shoveling fuel into the fire. These are the hardest workers in the town. They receive the least amount of money.

Through cunning, he works his way up to the next floor. He gets higher pay, does less physical labor. I.e. he does not work as hard. Movies do not teach us to “succeed in life by working hard.”

Again, “Kid Blue,” moves up another floor, less work.

Blue strives to reach the top floor, using his brain and no physical labor at all. “Work smart, not hard.”

Look at the big executives, the higher up they are the smaller the brief case or computer they carry. The guy on the bottom the salesman (some get high pay) carries a big case.

Similarly, I guess the traders on the bottom have the heaviest time demands on there life style. The traders at the top the least. Real Wealth is free time.

chessman > The second issue is what to do with the free time, <

Free time is free time. Get a life. I have never had any trouble at all with what to do with my free time.

chessman > 1) What do you do during the day to occupy you time, something that helps you prevent impulsive trading and keeps you focused on your system? <

Usually I just sleep. The markets close at 9:30am. If I am in some other time zone, I take a drive. When you are driving between the opening and the close you are less likely to fiddle.

chessman > 2) How do you come to terms, that spending just a few hours a day a trading can make you a good living? <

Leave a trail for others to follow. Be kind, you can afford it. We get payed for taking risks. We take risks 24x7, we get paid 24x7.

Traders may place orders for a short time, but are trading all of the time. Once you are in the game. You are still in the game even when you are not in the game. (do not have a position on.)

 

[chessman]

Quote from -ooO-(GoldTrade:


Look at the big executives, the higher up they are the smaller the brief case or computer they carry. The guy on the bottom the salesman (some get high pay) carries a big case.

I appreciate your comments, you raise many good points, the differentiation between working smart and working hard. I would have to rent Dennis Hoppers movie sometime !

I would however take issue with your above statement. These days in corporate America, big executives as you call them or partner level managers almost always put in 10-12 hour days and have to come in few saturdays a week.

 

[Kap]

I play many online games, mainly checkers & backgammon, of which by accident i'm becoming a master, search endlessly on ebay for oddities and throw a few very small lots into the futures markets just to get a "feel" of whats happening, boredom in this game is a huge problem when u feel u just wanna take part and dive in regrdless.

What helps me is reminding myself that doing nothing when clearly you shouldn't is a trade in itself.

 

[harrytrader]

I don't understand why you need to stay in front of your machine if you are a swinger. Only a scalper need to.

Quote from chessman:

Sorry I left out a note: this thread "feeding the slot machine", is not an attack on people who day trade, or meant as disrespect to others who watch the mkt all day long.

I just find, that in my case it is counterproductive. I hope you can appreciate the candor. Thanks

 

[-ooO-(GoldTrade]

chessman >, big executives as you call them almost always put in 10-12 hour days and have to come in few Saturdays a week.<

Peasants, my point exactly Peasants. Day laborers in suits. Real Wealth, free time is beyond their grasp. Possibly beyond there comprehension. What difference does it make what titles they give themselves, if they do not have any time to live free?

Ask their children, ask their wives if these worker bees have the luxury of leisure. They can’t afford it. They are living someone else’s dream. Do THEY even know what it is?

Looking out across the ocean, with Surfer girls in my mind. I can only laugh! Trading Spreads is the best business in the world. No customers, no employees, no stockholders, no salesmen, no lawsuits for sexual harassment. Almost no overhead, high potential profit. No risk at all compared to mountain climbing, swimming in the ocean or even driving on the freeway with an SUV full of kids.

This is true capitalism, when any market is trading you can have a cut if you want it. We can choose what to trade and when to trade them. We can live anywhere, do anything with anyone, whenever we want. We can exercise limitless creative freedom.

Why Trade Futures...

We do not have to live under some corporate boot. Our time is our own. We take positions and share risks; we do not need to have Jobs. The good karma comes to us from our part in feeding the world. Providing the liquidity that smoothes the world’s financial engines. Our part is insuring the producers of energy, food, easing the flow of wealth across borders.